Head In The Cloud: FCA Issues Draft Guidance On Outsourcing To The "Cloud"

Earlier this month the Financial Conduct Authority launched a consultation (Guidance Consultation 15/6) on draft guidance which is intended to help firms oversee effectively all aspects of the life cycle of their cloud and third party IT outsourcing agreements from initial due diligence to exit. It does so by setting out the FCA's expectations in relation to the use of such services.

Is there a need for the guidance?

Both firms and cloud service providers have expressed uncertainly about the application of FCA rules on outsourcing to the cloud. The FCA, recognising that such concerns could be a barrier to the use of cloud services in the sector, is anxious not to stifle innovation. The main aims of the proposed guidance, therefore, are to facilitate the use of cloud services and help ensure firms meet their regulatory responsibilities.